Parol Evidence and terms of Contract Flashcards
What is the parol evidence rules and what does it do?
- keeps out the evidence of or excludes.
- prior or contemporaneous agreements
o either oral or written - if it contradicts the later final writing
Final writing supersedes prior oral or written evidence. This is because its more reliable
Mitchill v. Laff
There was a final writing which talked about sale of a farmhouse for exchange of 8400 dollars. The person selling said that she would remove the icehouse across the street. The deal to remove it was not the part of final written integration.
Later on the buyer tried to introduce this parole evidence.
The verdict was that the final writing is more reliable evidence.
Can you contradict the terms in final written integration when it comes to Parol Evidence?
What if JLo has a fax stating the changed terms before the written lease was sent her? Is there a parol evidence analysis if you have an oral contract? What about an Oral Contract who wins in that?
She had a fax before the written lease was sent supporting her claim, it would not be allowed. She cannot get those facts admitted into evidence.
The basic parole evidence rule is that you cannot contradict the terms of a final written integration.
- Final writing is considered to be a more reliable evidence
- In Parol evidence rule, there is a final writing, if you have an oral agreement there is no parol evidence rule analysis.
- What triggers your parol evidence rule analysis, is that there needs to be a final writing.
- The contest between final writing and what came before the final writing.
- Final writing wins
If they have an oral agreement that would trigger the Statue of Fraud rules. Anytime there is a word oral, we should know to apply statue of frauds.
AGAIN UNLESS THERE IS A FINAL WRITING THE PAROL EVIDENCE RULE WOULD NOT APPLY.
The partial integration exception.
What are the exceptions to the parol evidence rules? The question here is that The lease says nothing about sleeping arrangements, JLO then claims that before signing the lease the manager promised to throw a bridal suite for free?
- What if the lease said that the contract is limited to the terms herein?
1) When you bring in the evidence to add to the partially integrated writing.
a. But not a complete integration. Partial integration is the final statement of the terms included but not a complete statement as to the entire deal.
- Yes, Jlo can get that because assuming it was only a partial integration
- You can bring in Parole evidence to add to the deal
- You are not contradicting the deal, or explaining the deal. She is just adding to the deal.
- this is the quintessential merger clause. They are adding all the prior oral and written understandings in the four corners of the document that will be a complete integration. If there is a complete integration. Parole evidence is not there to add to it. Only in cases of partial integration parole evidence is allowed, otherwise it will be barred.
The exception of Defense against formation not contradicting the writing
What is the exception of Defense against formation not contradicting the writing?
JLO sound proof room told earlier but it is misrepresented later. Can she get out if there is a final writing.
The party here just wants out of the writing.
Parol evidence is admissible not to contradict a writing but to establish the defenses to enforcement here.
Out of the deal, JLO just wants out she says that she was a victim of fraud and does not want the judge to rewrite the evidence.
If the agreement process was itself flawed then the parole evidence is allowed.
The vague and ambiguous term exception
Will the parol evidence be admissible if it just to explain a vague or ambiguous term?
JLO signs a lease for the ballroom, says it was specifically for the grand ballroom. She also has a fax from the grand ballroom sent before they signed the written lease supporting her claim.?
The typo exception?
Can Parol Evidence be brought in to correct a typo?
Parol evidence would get in if you are not contradicting the writing, but just explaining a vague term.
The courts can consider this fax into evidence. This attempt to bring parol evidence is to interpret what the word Ballroom means.
She is using this to show that last week they sent her a fax and by ballroom they meant grand ballroom.
Here she is not contradicting the writing, only explaining the term ballroom.
Hence, the Parol evidence would be allowed in.
Parol evidence can be oral or written. She can bring in either oral prior evidence or written prior evidence. To explain what the term ballroom meant.
When is Parol evidence irrelevant?
What if in Later events there is bad stuff happening? (Linked to the previous card)
Later events, if there is bad stuff happening after the contract was entered into, parties agreeing to change the term afterwards, that is not a parole evidence test. Parol evidence is irrelevant in this scenario
Parol evidence only looks at the stuff backwards that happened before the writing.
If there is stuff that happened after the parole evidence writing that is now the stuff to modify the conract. We now have to look at things like pre-existing duty rule applies, show me a new consideration or an exception to the new consideration. Or is it sale of goods modification in which case I need good faith.
The Parol evidence looks at the stuff that happened before the final integration. Here she was offered the room after signing the lease.
If there is modification to the contract, we have to analyse whether
it is common law modification where the pre-existing legal duty would apply.
- Either there is new consideration or exception to the consideration rule
- Or is it sale of goods modification where the person would need good faith.
You also have to think whether the modification is in writing or not, depending if it is within the statue of frauds or not. If a later term changes that is a modification fact pattern.
Can “Parties Conduct”, be used as a Source of terms or Evidence of Intention?
Explain, course of performance, Course of dealing and Trade Usage and Custom?
Do they have to be used in hierarchy?
The chicken and the broiler terms, explain this?
The answer to this is Yes and and there is a hierarchy of how to consider it. As parties conduct can provide supply terms
1) Course of performance: This is how the parties have performed with each other in the prior installments of the current contract.
Example: You might have a seller and a buyer who have contracted for 100 chickens. If they supplied broilers for the first 3 months of the contract, That can provide evidence for what chicken means in month 4, for the rest 12 months also it will mean a broiler.
a. It is how the parties performed, in the prior installments of the current deal.
b. It would be pretty good evidence to figure out what the term chicken means.
2) Course of dealing: This is what parties did with each other in prior contracts. Here we look at the previous contracts, to help define the terms in current contract.
a. Course of dealing is how they interpreted the word chicken in the last years deal.
b. Previous deals are a little bit less reliable evidence of what chicken means.
c. Course of performance is generally more important
3) Trade usage or Trade Custom: These are the community norms, of which the party should be aware of or are already.
Eg: That trade custom can be used if everyone and the trade believes chicken to mean a chicken that weighs 6 pounds, but can be broilers or fryers. You can use that trade custom to help in fill in the word chicken.
Words are given prefrence over all three. Obviously if the parties decide chicken to be 10 pounds they have to be 10 pounds.
Then you can look o their course of performance what they did in their prior contracts
All these steps are looked in a hierarchical order.
What does the term warranty mean? and how is it different from mere puffing?
Meaning Sellers Warranties of Quality
- Where a seller describes the goods, or shows a fact about the goods. She shows the buyer a sample or model of goods. That is expressed warranty.
- All of the above would be considered expressed warranties.
- But not a seller expressing an opinion: A seller simply puffing up her product is not an express warranty
What are some examples of expressed waranty?
1) This ring is 24K gold?
2) Computer guaranteed for 2 years?
3) Seller used a sample or model?
1) Yes, any statement of fact or description of goods equal to express warranty
2) Yes, as this is the promise that the goods are going to work for two years.
3) Seller uses a sample or a model of her product that is an EXPRESSED WARRANTY
What is an example of mere puffing?
All parts of widgets top notch or best quality: That is not an expressed warranty,
Mere puffing, they know they can make that promise without being held to that promise. (This is merely an opinion about what best quality or top notch is.
What are the implied warranties of Merchantability?
What is the Article 2 Rule here?
Can you explain the bicycle shop example?
Implied warranties of Merchantability: That these goods are fit for their ordinary foreseeable purpose for which they are to be used.
“And not because of anything the seller said expressly. It is implied by law.”
The article 2 rule is that there needs to be a merchant seller, and not just any ordinary person.
Example: If you buy goods online from big wheels cycles who is a merchant it, would be covered under the implied warranty. Because she is a merchant and she is saying it will be good for ordinary purpose.
But if you buy a van from big wheel cycles, not applicable because they are not in business for selling delivery vans. They are not in the business for vans.
Big wheel cycles selling anything else, not implied warranty of merchantability.
Make sure its a merchant, who regularly sells those type of goods. Before you hold them liable for Implied warranty of merchantability.
What is the Implied Warranty of fitness for a particular purpose?
Does a seller has to be a merchant here?
Buying a coat to keep me warm example?
Goods are going to be fit for a buyers particular purpose beyond the ordinary purpose.
- Buyer comes in with a special purpose
- Seller knows of special purpose
- Seller is going to pick out suitable goods for that purpose
And knows that the buyer is relying on seller to pick suitable goods for buyers special purpose.
This is an Additional implied warranty of fitness for a particular purpose, beyond the normal purpose.
- Seller doesn’t have to be a merchant here, If a person says my special purpose is X and that person picks out goods that fits X that is going to be the special purpose.
- Person goes to buy a coat for the winter that will keep her 10 degrees warmer and seeks help from a sales person there. It will be covered under the implied warranty of fitness for a particular purpose.
What are Disclaimer of Warranties?
Who survives the attempted disclaimer test?
Disclaimer of Warranties
- Seller can disclaim implied warranties but not expressed warranties.
- If they make an expressed warranty they cannot later disclaim that.
- Expressed warranties survives that attempted disclaimer, that means if you make a promise you cannot break that promise.
Such as using a phrase “all parts are good for two years, all warranties are disclaimed” wont be applicable.
Two ways to get out of disclaimer
- With words such as “as is” and “with all faults”, implied warranties disappear. They are seller disclaimed warranties. The contract says nothing else about warranties are there any implied warranties under this contracts? NO
- There are also no warranties if the user states that there is no implied warranty or fitness. But they have to make it conspicuous. These words are so written that a reasonable person would notice it. IT HAS TO BE REASONBLY VISIBLE. It has to be reasonably obvious to a reasonable person.
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Limitations of Damages Clauses comparison, Seller can limit buyers remedies for breach of any warranty.
Limitation of Damages Clauses in the Contract?
The AL Kitchen test, and the implied warranty?
You can limit the remedies as long as the limitation is not unconscionable.
There is an exception to this ability where a personal injury occurs.
- Limiting buyers remedies, in case of consumer goods those kinds of limitations are unconscionable.
- General Rule is that you can limit warranty for an express warranty as long as its not unconscionable.
- Buy oven from Al’s kitchen, its going to come with implied warranty
- To limit remedies to a replacement part would be unconscionable if the person is injured in fire.
- The test always hinges on whether limiting the liability was unconscionable or not.
What are Risk of Loss terms in the case of delivery?
If you have goods that get damaged or destroyed before the buyer gets them. And neither your seller or buyer is at fault. Who bears the risk of loss for those goods. ?
- If the seller bears the risk of loss they have to provider buyer with the goods for no additional cost or they’ll be liable for breach
- If the risk of loss has passed to the buyer, the buyer has to pay the contract price even though the goods are damaged or destroyed.
